Dealer wins key appeal in duty deferment battle

A PRA member has won a key appeal against HM Revenue and Customs (HMRC) in the battle to enable dealers to buy fuel under duty deferment arrangements.

Brobot Petroleum has successfully appealed via the First Tier Tax Tribunal against HMRC imposition of unreasonable conditions, to obtain an excise duty Deferment Account Number (DAN) for Oil Products.

The case was prepared and presented by Alan Powell for Alan Powell Associates Ltd, a specialist excise duties consultancy. Powell explained that “the case confirms that petrol retailers are entitled to defer excise duty on fuel delivered to them from bonded terminals with nil security. Furthermore – and the crux of this matter - HMRC must grant such approval where the need to defer duty on fuel is demonstrated by the retailer”.

Eddie Bright, director of Brobot, praised the work by Powell, and said: “We now have to wait to see if HMRC decides to appeal the tribunal decision for which they have a time scale to lodge within six weeks.

“If not I see the next step as Brobot being issued with a DAN which will allow me to enter supply negotiations on a duty deferred basis. That will be the start of changes in our industry as we will be entitled to receive the vapour scheme benefit reducing our losses.

“It’s still early days, but the signs are that our success should be the thin end of the wedge in changing the way fuel duty is levied on dealers.”

PRA says deferring the fuel duty provides a number of significant benefits to the independent retailers which include:

• Credit on the duty payable to HMRC extended to the full length (up to 31 days) for the appellant;

• Elimination of charges held by suppliers against some of the appellant’s properties as a condition of a shorter period of credit;

• Elimination of excise bad debt for the supplier.

PRA chairman Brian Madderson commented: “The PRA has provided active support at the tribunal with our witness statement being cross-examined.

“We feel that the ability to buy fuel under duty deferment arrangements would also eliminate most of the conditions that lead to apparent stock losses on each and every delivery of fuel from suppliers.

“HMRC should have been intervening to prevent such losses but has failed in its duties to retailers, hence the importance of this decision.”

Since 2001 over 4,000 independent retailers (60% of the total) have been forced to close their businesses largely due to financial pressures. It is likely that we will continue to see at least 150 cease trading this year.

Madderson continued: “This ruling should help many to stay in business by improving cash flow, increasing fuel stock levels, reducing costs and becoming more competitive.

“The PRA believes that a more robust and sustainable independent fuel retailing sector is vital for the UK economy and energy resilience.”